Ally Invest Review 2023

Learn why Ally Invest - owned by Ally Financial - is a great online broker for investors who want low commission fees and a variety of research resources.
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Ally Bank has earned a reputation as a leader in online banking by consistently offering highly competitive deposit rates. With its 2016 acquisition of TradeKing, Ally is now trying seeking to make a similar impact on the brokerage business.

The new entity, known as Ally Invest, has assumed TradeKing’s brokerage registration, which dates back to 2011. The new firm also carries over some of the attributes that helped TradeKing place in the top half of its peers in a recent study of Best Online Brokers.

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Who Is a Good Fit for Ally Invest?

An attractive aspect of Ally Invest is that it offers a combination of affordable commission rates with investor education resources.

Investors who want low commission fees

At $4.95 for standard stock trades, Ally Invest’s commissions are clearly lower than the average of $6.05 found in the survey of online brokers. The $4.95 price point has become something of a standard for brokerage firms wishing to offer inexpensive commissions. A handful of firms were at this level in the survey, and the only firms offering cheaper commissions also had minimum account size requirements that would preclude some beginning investors.

Investors who are looking to improve their knowledge

Understanding the workings of the financial markets is a key to investment success, and Ally Invest helps investors in this regard by offering an Investing Education Center. This provides a general background on securities trading as well as more detailed information on stocks, bonds, options, and mutual funds.

Ally Invest fees and other considerations

A positive development in the transition from TradeKing to Ally Invest is that Ally has eliminated a $50 inactivity fee for customers who have placed no trades within the past 12 months. This should make the firm a more attractive choice for infrequent traders or investors who are not yet experienced enough to know what their activity level is going to be.

In its somewhat limited regulatory history, Ally’s frequency of disclosure events has been slightly less than the median of its peers, so there are no glaring red flags there.

Why Ally Invest may not be right for margin investors

While Ally Invest offers very competitive rates for ordinary stock trade commissions, its margin interest rates are less competitive. For a $25,000 margin balance, Ally has bumped up its margin interest rate to 8.50 percent, which is 25 basis points higher than the rate TradeKing charged at the time of the MoneyRates survey. That interest rate was already more expensive than the peer group average. For investors using margin to leverage their portfolios, the margin interest rate is a critical hurdle that needs to be overcome in order to earn a positive rate of return.

On the other hand, for investors pursuing non-leveraged trading strategies, Ally Invest’s low commission rates make them a cost-effective brokerage firm. Today’s investors are also likely to appreciate the convenience of Ally’s trading platform, which can be managed across multiple devices. The firm offers apps for both iPhone and Android devices. In active markets, this ability to trade on the go could prove very valuable.

Richard Barrington has been a Senior Financial Analyst for MoneyRates. He has appeared on Fox Business News and NPR, and has been quoted by the Wall Street Journal, the New York Times, USA Today, CNBC and many other publications. Richard has over 30 years of experience in financial services. He has earned the Chartered Financial Analyst (CFA) designation from the Association of Investment Management and Research (now the “CFA Institute”).